The ratings on Phoenix, Ariz.-based PetSmart Inc. reflect the risks associated with the highly fragmented pet supplies retail industry and the company's aggressive store growth. These factors are only partially mitigated by the company's established market position in the industry and its improving operating trends and credit measures. PetSmart has made significant progress in improving its operations over the past three years. Sales trends have been positive, with comparable-store sales up 5.1% in the first nine months of 2006, following gains of 4.2% in all of 2005 and 6.3% in all of 2004. These trends are attributed to PetSmart's successful store reformatting and expanded focus on pet services. Operating efficiency has also improved, largely driven by recent enhancements to PetSmart's
